While the inflow of funds into Bitcoin spot ETFs has exceeded expectations, reaching $10 billion in just two months, the status of speculative funds remains unknown. This article, sourced from the founder of Bianco Research and compiled by Carbon Chain Value, examines the flow of funds, average costs, evidence, and trading volume of Bitcoin spot ETFs.
The author suggests that the strong influx of speculative funds into Bitcoin spot ETFs, similar to the interest in artificial intelligence stocks such as NVIDIA and $MSTR, does not indicate a long-term trend of wealth management institutions rushing to buy. Instead, it reflects a surge in short-term trading and speculation funds, with over $1 billion per day flowing in earlier this week.
The author speculates that if they are correct, the influx of weak-handed speculative funds may quickly flow out, leading to a correction or collapse. This potential outflow must find buyers at any price, which may expose design flaws in these Bitcoin spot ETFs (lack of physical transfer). If that’s the case, it could undermine the commitment to long-term adoption of these funds, which would take years, or even longer, if the market starts to resemble an out-of-control casino.
The article then delves into the flow of funds, stating that since trading opened on January 11th, a total of $12 billion has flowed into US Bitcoin spot ETFs. The author includes GBTC dollars in this calculation, as a significant portion of funds (at least half) may have transferred from the high-fee $GBTC (150 basis points) to the low-fee Bitcoin spot ETFs (average of around 30 basis points).
Using daily flow and price data, the author calculates the average purchase price (cost) of all inflow funds. For Bitcoin spot ETFs, the average purchase price is approximately $57,600, with holders sitting on $2.7 billion in unrealized profits. The author also provides the figures for the x-GBTC version, excluding GBTC, which has seen over $23 billion flow into Bitcoin spot ETFs, with an average purchase price of $54,600 and $6.97 billion in unrealized profits.
The article highlights that a 20% correction would wipe out all unrealized profits for 20% of investors, and questions whether they are truly hodlers as they claim. The author argues that since it is unclear who is buying these ETFs, whether retail investors, institutions, trading accounts, or long-term philanthropic funds, it is speculative capital flowing in. The trading volume of Bitcoin spot ETFs is also highlighted, with daily volumes surpassing those of popular ETFs such as $SPY and $QQQ.
Despite the optimism of Bitcoin bulls who believe that these holders are entering a new asset class and will never sell, the author remains skeptical and suggests that evidence shows otherwise. The article mentions a research report by JMP Securities, which predicts a $220 billion inflow into Bitcoin spot ETFs in the next three years, potentially doubling the price of BTC. However, the author emphasizes that the current process and flow are likely just the tip of the iceberg, and the influx of funds will continue to grow.
In conclusion, the author proposes waiting for the next 20% correction to see what happens when unrealized profits disappear. They provide an example of a 20% correction in the first month of Bitcoin spot trading, where 40% of funds left.
Related reports on the opening of Bitcoin spot ETFs for investment in Thailand and the Financial Supervisory Commission’s restrictions on ETF advertisements are also mentioned.